Car Loans - What to Consider When You Need A Car Loan
Choosing the right car loan can be tricky unless you plan well in advance and make the right decision. You can do that only when you know what differentiates a good car loan deal from a bad one. Unless you make the right choices, you may end up with a bad deal — one that could have been very profitable. To help you narrow down to the most profitable option, we have put together this comprehensive guide. At Money Pig, we consider it our responsibility to guide you through the process and help you get the best car loan, after taking your individual requirements into consideration.
FAQs | Things to Consider While Borrowing Car Loans
- Where can I apply for a car loan?
- Should I borrow a car loan?
- Why should I borrow a car loan from Money Pig?
- What are the benefits of buying a car on a Personal Loan?
- What are the benefits of buying a car with a car loan?
- Does Money Pig offer car loans?
- How do I apply for Money Pig’s car loans?
- Will I be credit checked for a car loan?
- How much car loan can I borrow?
- How soon can I get a car loan?
- Do I have to be in full-time employment to get a car loan from Money Pig?
- When do I start owning the car?
- How much interest is charged on a car loan?
- How can I pay lower interest rates on car loans?
- Can I repay my car loan early?
- What happens if I do not repay the car loan?
- What happens at the end of the car loan?
If you are looking out for car loans, then you can apply for one from a bank, financial institution or a direct lender. You must choose one based on the amount you wish to borrow, interest rates that you are willing to pay, and the documentation required for the sanction of a car loan.
If you have clear documentation, steady income, and a high credit score, then most banks and financial institutions would be willing to advance car loans. However, most of these car loans would give your bank or financial institution the ownership of your car until you repay the entire car loan amount and have the car ownership transferred back to you.
This makes it difficult for you to sell the car in the near future, just in case you relocate or wish to buy another car. To help borrowers overcome these issues, Money Pig partners up with several direct lenders who would be willing to offer you the best deal on car financing and other loan options that you can choose from.
Car loans are a great way to purchase a vehicle because it lets you maintain liquidity and use your savings in a better manner. You could use this to buy more revenue-generating assets such as equities, real estate, or bonds. Moreover, since your car is most likely to depreciate in value over time, it only makes sense to purchase it through a car loan, which allows you to repay in small monthly installments, instead of spending a lump sum from your savings.
So, the answer is both ‘Yes’ and ‘No’ because whether to choose a car loan as your car financing option depends upon your income, current liabilities, life stage, and total assets. Car loans are undoubtedly one of the most preferred car financing options, but it’s definitely not your only option. So, if you have identified your favorite car and can afford it, then you can finance it in many ways — personal loans, PCP, Hire Purchase or even lease.
However, if you are buying a pre-owned car, then doing that through a personal loan would be the best option. In fact, nowadays, most buyers choose to borrow a personal loan to purchase pre-owned cars as well as the new ones. They do this in a bid to eliminate the complexities involved in selling a car that’s purchased through a car loan.
Usually, when one borrows a car loan, the borrower does not own the car until full repayment of the car loan which may cause difficulties in selling it. For this reason, Money Pig offers several other types of short-term credit options that you can choose from. Whether you are a student scrambling for a car loan or a well-settled professional, Money Pig’s Direct Lenders can offer you the best borrowing options to buy your dream car.
Money Pig is an intermediary that connects you to several renowned direct lenders who have the necessary license from FCA to carry out financial operations. So, you do not have to worry about transacting with an illegal or illegitimate direct lender. In fact, we encourage you to check and confirm the status of our direct lenders on the online FCA Register.
Also, we connect you to multiple direct lenders, which puts you in a better position when it comes to negotiating a profitable deal. These are ambitious direct lenders willing to offer you low-interest rates and flexible repayment options. On the other hand, if you chose to borrow from a bank or a credit agency, then your options are limited to that particular lender only.
Another key benefit of borrowing from Money Pig is that all our direct lenders run soft credit checks, which shows them your financial records just as you see them yourself. Unlike banks and financial institutions, our direct lenders do not carry out hard credit checks, which may have a negative impact on your credit history, just in case your car loan application is rejected. Despite the fact that there are only remote chances of a car loan rejection when you apply with us, we make it a point to protect your best interests by partnering-up with direct lenders willing to run only soft credit checks.
Car loans are custom designed for car financing but is quite an outdated option, considering the complexities involved in it, such as transfer of ownership. On the other hand, there are scores of options that the automobile industry offers. So, if you end up finding a better car in the near future and wish to sell your existing one, then your existing car loan could hold you back from doing that. When you buy a car with a car loan, you do not own it and therefore cannot sell the asset. This is possible only when you repay the entire car loan and the car financer transfers the ownership to you.
However, when you buy your dream car with a personal loan, you begin to own the car from the very moment you purchase it. So, if you find a better option and wish to sell it in the near future, then you very well can. At Money Pig, we let you choose whichever type of loan you wish to borrow based on your credit history. So, whether you wish to borrow a car loan or a personal loan, we’ll connect you to direct lenders willing to offer you the best deal.
Many people still choose to buy a car with a car loan because they wouldn’t have to deal with the expenses and obligations that come with ownership. So, to avoid being entirely responsible for the upkeep and maintenance of the car, most people choose to stick to borrowing car loans.
Also, the interest rates are lower on car loans, as compared to personal loans but the borrowing period is usually lesser. Most lenders offer car loans for a period ranging between 36 months and 72 months, while you can borrow personal loans for a longer period, which works pretty well for those with lower income.
However, a car loan is secured against the car and therefore may not require you to risk any other asset. This isn’t the case with personal loans, which may be secured or unsecured, depending on your credit history and repayment capability.
Money Pig is a financial intermediary that connects you to some of the best direct lenders in the industry, who are eager to offer you the best deals. All the direct lenders that we connect you with are licensed by the FCA and are highly reputed. So, as a financial intermediary, Money Pig does not offer car loans or any other types of loans directly but connects you to its wide network of reputed direct lenders.
In addition to car loans, these direct lenders also offer several other short term and long term loans for individuals with all types of credit scores. Our goal is to connect you to several direct lenders through a single platform so that you do not have to file multiple car loan applications, which could have an adverse impact on your credit score. Also, having multiple options lets you choose the best deal for your car loan.
Money Pig’s car loan application process is pretty straightforward and takes just a couple of minutes to complete. You can do this from the comfort of your home, through an online application and if you are eligible, we’ll get back to you with some of the best car loan options. However, to be eligible for a car loan in the UK, you must have completed 18 years of age and must be capable of repaying the car loan.
Therefore, before applying for a car loan, you need to know exactly how much you wish to borrow, your monthly income, current debts, number of dependents, and other financial obligations. Based on all of these criteria, you would be eligible for the entire amount that you wish to borrow, or part of it.
Yes, regardless of the bank, financial institution, or the direct lender you apply to, you would be credit checked before your car loan is approved and subsequently sanctioned. With regard to the credit checks, there is no distinction between the types of loans that you wish to borrow. According to the Financial Conduct Authority (FCA), lenders are under the obligation to carry out credit checks in order to preserve the integrity of the financial sector. So, even if you apply for a car loan, you will have to go through a credit check process.
Also, if the bank or the financial institution rejects your car loan application, then that could have an adverse impact on your credit score. Therefore, to protect your best interests, we run a soft credit check, which does not have any adverse impact on your credit ratings. These soft searches help you ascertain the amount for which you are eligible, and also who would be willing to offer you the car loan. Accordingly, we connect you to direct lenders who would be willing to offer you the best deal. Also, running a soft credit check helps our direct lenders fulfill the mandatory obligation laid down by the FCA, which creates a win-win situation for everyone involved.
Your car loan eligibility is calculated on the basis of your repayment capability, which is ascertained through your current income, financial obligations, debts, previously filed tax returns and few other parameters. If you are unsure about how much car loan you wish to borrow, then you may fill in the rest of the details and send them over to us. We will get back to you with the necessary details about your car loan eligibility and all the other necessary particulars.
As a rule of thumb, we recommend that you borrow at least 60 percent of the total value of the vehicle as a car loan. However, we recommend that you dedicate only twenty to thirty percent of your total monthly income towards repaying the car loan because there are other expenses that you would incur such as maintenance, fuel, etc… Also, set aside some of your savings to be able to repay the car loan just in case you lose your job.
Money Pig’s direct lenders can advance the car loan amount within hours of your car loan’s approval. That’s because we partner-up with direct lenders who are enthusiastic about closing deals and have flexible eligibility criteria. So, with just a soft credit check, they would have no problems in transferring your approved car loan amount into your bank account. However, this is only possible when you and the direct lender offering the car loan agree to a particular interest rate, which would vary depending on the amount you wish to borrow, your credit history, and repayment capability.
No, you do not have to be in full-time employment in order to qualify for a car loan from one of our direct lenders. However, you need to have a steady source of income which indicates your repayment capability. At Money Pig, we understand that there are several remote self-employment opportunities available — some of which are much more lucrative than full-time employment. Therefore, we do not press on the need for full-time employment and choose to keep things more flexible. So, if you can repay a loan and your bank account and other financial details confirm that, then you can choose from the many short term and long-term credit options available with us.
The answer to this question depends on the car financing option that you choose — car loan, personal loan, or cash. If you choose to make the entire payment by cash, then you own the car right away, and the same applies to those who choose to purchase a car with a personal loan. However, if you choose to do so by borrowing a car loan, then the ownership lies with the financer, whether it is a bank, financial institution, or a direct lender. This ownership is transferred to you only when you make the complete repayment of your car loan.
The interest rates charged on the car loan varies depending on the amount of loan and the borrowing period. Also, other factors such as your current income, existing debts, and credit score play a significant role in how much interest is charged on the car loan. At Money Pig, we team up with some of the brightest and most ethical direct lenders who would be happy to offer you a winsome deal. Moreover, we know who’s willing to offer you the most profitable deal and we use this information to connect you with the direct lender willing to offer the lowest interest rates.
At Money Pig, we offer you the best deals depending on your personal and financial details. However, if you have an exceptional credit history, then we encourage you to negotiate a flat rate of interest from the direct lender. By opting for a flat interest rate instead of APRs, you can definitely save up some extra money. Another option is to borrow the car loan for a shorter duration, which would help keep your interest rates low.
Yes, you can pay your car loan early, which is a wonderful thing to do. However, different direct lenders may have varying terms and conditions for the repayment of the car loan. Therefore, we strongly recommend that you have a word with the concerned direct lender before entering into a loan agreement. Most direct lenders may require you to borrow the car loan for a minimum duration or pay a certain interest rate upfront if you wish to repay it early. This is to make sure that they earn a certain amount of interest on the car loans that they advance. So, make it a point to clearly discuss the pre-payment and exit clauses with the direct lender, before entering into a car loan agreement.
Failure to repay the car loan may have dire consequences and in most cases, the car would be forfeited by the bank, credit agency, or the direct lender. You must know that the lender can enforce this action without any issues as he is the rightful owner of the vehicle until you repay the car loan and the ownership is transferred to you. Therefore, you must be sure of your repayment capability before borrowing a car loan. Also, we encourage you to discuss the non-repayment clause with the direct lender, before entering into a car loan agreement. We recommend that you consider negotiating at least a 60-day cooling-off period, from the date of non-payment. The cooling-off period refers to the period that commences immediately after your default payment. This is the period during which the Creditor agrees to not forfeit the car and allows you time to make the necessary arrangements. In times of financial crisis, this cooling-off period gives you enough time to make necessary arrangements to repay the creditor. You may not think it necessary while getting into a car loan agreement, however, if you lose your job, or if the global economy tanks then this clause could save you more trouble than you can imagine right now.
Once you have entirely repaid the car loan, then your creditor transfers the car’s ownership to you, and concludes the contract. Thereafter, the creditor has no right over the car, nor is the lender obligated to contribute towards its upkeep.
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